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Demonetisation: now a proven failure?:
Context:
Demonetization as a way to tackle black money.
To what extent the demonetization was successful?
- It was thought that if cash was squeezed out, the black economy would be eliminated.
- Cash is only about 1% of the total black money estimated in the economy.
- Not even 0.01% of the black money has been extinguished.
Why there is a little impact of demonetization on the black economy?
- Black money is a result of black income generation.
- It is produced by various means which are not affected by the one-shot squeezing out of cash.
- Squeezed out cash quickly get regenerated.
- Criticism of the demonetization:
- Demonetization is not a way to tackle the black economy.
- The government’s intention behind the demonetization was not clear and still.
What is the challenge in tracking black money?
- The income tax department does not have the resources for dealing with lakhs of tax payers.
Who was impacted due to the demonetization?
- The demonetization was carried out without preparation.
- The unorganized sector was badly impacted.
- The Farmers, traders and those who never had any black money.
- The demonetization has impacted the overall growth rate of the country.
